European liability claims reserving tail

Swiss Re’s latest sigma study has identified a time lag in settling liability claims in Europe over the last 25 years. This feature is attributed to improved medical treatments and rehabilitation methods. In addition, policyholders are increasingly suing third parties to get higher levels of compensation than would be available under their employer’s policy – this also delays settlement.

By contrast, in the US, the time to settlement, which had been increasing, has now peaked and started to reduce. US claims are usually settled by a lump sum payment, whereas many European claims are subject to the payment of a structured settlement, exacerbating this difference.